Oct. 4 (Bloomberg) -- Cleveland Ship LLC, a company formed
to bid for a new class of U.S. Navy oilers, made a multibillion
dollar bid for Northrop Grumman Corp.’s shipbuilding unit, the
new company’s chief executive officer said today.

The Cleveland-based company didn’t specify the value of its
Sept. 23 bid in an e-mailed statement dated yesterday.

“It’s a multibillion dollar bid,” CEO Edward Bartlett
said in a telephone interview. The offer includes both debt and
equity, Bartlett and his partner Renold Thompson said in the
interview.

If Northrop accepts the offer and the transaction is
completed, Cleveland Ship will create a publicly traded company
called Cleveland Shipbuilding Group Inc., Bartlett said.

Northrop’s ship division may be worth as much as $4.6
billion in a sale at an average industry multiple, based on data
compiled in July by Bloomberg. Los Angeles-based Northrop said
in July that it would shut the shipyard and shift operations to
Mississippi as a first step in selling or spinning off the unit.

Cleveland Ship said it expressed interest earlier this year
in buying Northrop’s shipyard in Avondale, Louisiana. A Navy
plan announced last month to accelerate production of double-hulled oilers may enable Northrop, the largest maker of Navy
vessels, to keep the Louisiana shipyard open long enough to find
a buyer.

$5 Billion Order

Navy contracts valued as much as $5 billion for two DDG-51
class destroyers and one LPD-17 class transport ship for
Northrop’s Ingalls yard in Pascagoula, Mississippi, may be
affected by how soon the shipbuilding unit is sold, Bartlett
said. Once the Navy knows the future of the yards, it will be in
a better position to assess the cost structure and award the
contracts, he said.

Belote, speaking for Northrop, said the company is
discussing contracts with the Navy and “wouldn’t want to play
those negotiations in the media.”

Cleveland Ship’s proposal for a new fleet of double-hulled
oilers to replace the Navy’s single-hulled ships may be worth $8
billion, Bartlett said in the statement. Bartlett is a retired
U.S. Navy officer and former executive at DRS Power Systems,
according to the Cleveland Ship website.

Cleveland Ship sees an opportunity for $10 billion to $12
billion in new business bookings at Avondale in the next decade
or so, Bartlett said in the statement.